Palm Oil Retreats as Weak Fundamentals Weigh

Malaysian palm oil futures eased below MYR 4,600 per tonne after recent gains, pressured by weaker edible oils on the Dalian and Chicago markets and lower crude oil prices, which reduced palm oil’s competitiveness as a biodiesel feedstock. Sentiment remained bearish after monthly data from the Malaysian Palm Oil Board showed September inventories surged 24.5% month-on-month to a record 3.51 million tonnes, extending their rise for a sixth consecutive month. Simultaneously, production climbed 16.5% to 2.12 million tonnes, its highest since August 2015, while exports fell 12.1% to 1.12 million tonnes, marking a second straight monthly decline. Investors also awaited China’s inflation and trade data for fresh signals on demand in the key consuming market. However, losses were capped by signs of stronger October shipments, with cargo surveyors estimating Malaysian palm oil product exports rose 33.5%–37.7% month-on-month in October 1–10.

Malaysian palm oil futures jumped 1.3% to about MYR 4,650 per tonne, rebounding from earlier weakness as firmer prices on China’s Dalian market lent support. Export prospects also brightened after surveyor Intertek estimated Malaysia’s shipments surged 33.5% in the first ten days of October from the same period in September. In top buyer India, refiners reportedly booked around 150,000 tonnes of palm oil in three days last week, with sunflower oil supplies tight ahead of November’s festive demand. Even so, upside was capped by bearish monthly data from the Malaysian Palm Oil Board. September inventories swelled 24.5% to a record 3.51 million tonnes, extending a six-month rise. At the same time, output climbed 16.5% to 2.12million tonnes, the highest since August 2015, while exports fell 12.1% to 1.12million tonnes, marking a second monthly drop. Traders remained cautious, awaiting China’s inflation and trade figures later this week for further signals on demand in another key market.

Malaysian palm oil futures inched higher, hovering near MYR 4,670 per tonne after a strong rally, supported by firmer edible oils on the Dalian and Chicago markets and brisk Indian buying, with refiners securing about 150,000 tonnes in three days amid tight sunflower oil supplies ahead of November’s festive demand. Traders also awaited Malaysia’s 2027 state budget for potential industry support and monthly data from the Malaysian Palm Oil Board for direction. Gains were capped, however, by a stronger ringgit and softer crude oil after U.S. President Trump said Washington would not attack Iran before next month’s U.S. elections. Meanwhile, Reuters projected inventories to hit a record high in September, topping the 2018 peak, as rising output outpaced sluggish exports. Cargo surveyors estimated shipments plunged between 17.1%–28.8% mom, underscoring weak demand. Despite headwinds, futures were on track for a weekly rise of near 3% so far, reversing weakness in the prior two periods.